Question
NA Co. issued note receivable in January, 2017. The terms of the note are a two-year, $100,000, 10% interest rate. Assuming the market interest rate
NA Co. issued note receivable in January, 2017. The terms of the note are a two-year, $100,000, 10% interest rate. Assuming the market interest rate is 8% per annum and NA Co. use the effective interest method for an amortization, how much would NA Co. amortize discount (or premium) on the note receivable on the end of 2017? (The present value of $1 for one and two period at 8% is 0.92593 and 0.85734. The present value of $1 for one and two period at 10% is 0.90909 and 0.82645). Group of answer choices
Discount $1,818.
Premium $182.
Premium $1,715.
Discount $0.
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Introduction to Managerial Accounting
Authors: Peter C. Brewer, Ray H Garrison, Eric Noreen
8th edition
1259917061, 978-1259917066
